SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 79550/12

DATE: 2013-05-31

RE: Fausto Simone, Applicant

AND:

Economical Mutual Insurance Company, Respondent

BEFORE: Justice B. Glass

COUNSEL: Counsel, for the Applicant, Laurie Aitchison

Counsel, for the Respondent, Bradley J. Wells

HEARD: May 31, 2013

ENDORSEMENT

[1] The Applicant commenced this application for a declaration requiring the Respondent to defend on his behalf a civil action against him for damages for personal injuries alleged to have been incurred by Vincenzo Sgambelluri and family law claims by Caterina Sgambelluri in court file number 78117/12.

[2] The Sgambelluri action has a cause of action focused on an alleged assault by the Applicant upon Mr. Sgambelluri February 17, 2011 in Pickering, Ontario. The statement of claim of the Sgambelluris initially stated that the Applicant had been convicted of assault causing bodily harm. The claim was amended to assault simpliciter.

[3] There had been a physical altercation between the Applicant and Mr. Sgambelluri after which the Applicant was charged with assault causing bodily harm. The altercation arose from Mr. Sgambelluri butting into the drive-through lane at a Tim Hortons store. The trial judge found that the breaking into the traffic line for the drive-through service was an act by Mr. Sgambelluri. At a trial in the Ontario Court of Justice, the Applicant was found guilty of common assault and the sentence was a conditional discharge. The trial judge had not been satisfied that injuries claimed by Mr. Sgambelluri were proven to be related to the physical contact with the Applicant. The trial judge found that there had been a chest bumping of between the two men. Mr. Sgambelluri claimed he sustained a broken leg following which he experienced depression and anxiety. The Sgambelluri claims were framed in wilful and intentional assault and battery or in the alternative that Mr. Simone’s actions were negligent with a reckless disregard for Mr. Sgambelluri. There is a claim for aggravated and punitive damages.

[4] The Applicant submits that the Respondent by virtue of an insurance policy in place is obligated to defend the action on his behalf; however, the Respondent submits that the claims are not covered by the insurance policy because the actions of Mr. Simone are excluded.

[5] The Applicant submits that the Sgambelluri claims are for the tort of assault upon Mr. Sgambelluri and in negligence on the part of the Applicant. If the trial decision results in a finding of negligence, then the insurance policy should cover the damages in negligence.

[6] The Respondent relies on the provisions of the insurance policy that exclude coverage for personal injuries that are caused by any intentional or criminal act or failure to act. Further, punitive or exemplary damages are excluded from coverage in the insurance policy.

Issues

[7] Are the actions of the Applicant within the exclusion provisions of the insurance policy regardless of what words are used?

Analysis

[8] In Tedford v. TD Insurance Meloche Monnex, 2013 ONCA, 429, the Ontario Court of Appeal at paragraph 14 listed principles governing the duty to defend:

(i) The insurer must defend a case in which the allegations if true would require the insurer to indemnify the insured.

(ii) The insurer must defend if there is any possibility that the claim falls within the liability coverage.

(iii) The court looks beyond labels used by the Plaintiff to determine the substance and true nature of the claims in support of the claims made by the Plaintiff.

(iv) Are there any claims that are entirely derivative in nature within the decision in Non-Marine Underwriters v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551. A derivative claim will not trigger a duty to defend.

(v) If the pleadings are not sufficiently precise to determine whether the claims would be covered by the policy, the insurer’s obligation to defend will be triggered should a reasonable reading of the pleadings infer a claim with coverage.

(vi) There ought to be an interpretation that such principles as the contra proferentum rule and the principle that coverage clauses should be construed broadly and exclusion clauses narrowly as at paragraph 31 of Monenco Limited v. Commonwealth Insurance Company, 2001 SCC 49 and paragraph 70 of Scalera (supra).

(vii) The court may consider extrinsic evidence referenced in the pleadings to determine the substance and true nature of the allegation.

[9] One might commence consideration of this application on the wrong foot very easily by losing track of the fact that there is another party involved with the claim. The Plaintiffs in the Sgambelluri statement of claim drive the show for the allegations to be proven at a trial. That claim, as amended, claims damages both for an intentional tort of assault by Mr. Simone as well as negligence on the part of Mr. Simone. If both bases for claims are separate, then, Mr. Simone is a prisoner of the pleadings of the Sgambelluris.

[10] The exception might be if the negligence allegations are determined to be derivative to the assault facts. If derivative, then, all is in the same hopper for consideration of conduct that might be determined to be excluded from insurance coverage because of intentional criminal activity by the insured, Mr. Simone.

[11] One cannot play a game of semantics and simply insert an allegation of negligence simply to benefit from the protection of an insurance policy. The purpose of such a limitation is that the insurance company is not insuring criminal activities and is very open with such a limitation in the wording of the insurance policy.

[12] If there is a realistic possibility that a claim in negligence might be advanced separate from a claim for damages resulting from an assault, the insured is entitled to benefit of a defence being carried by the insurer.

[13] Here, the Applicant was found guilty of common assault and the sentence was a conditional discharge; however, the trial judge was not satisfied that the case for assault causing bodily harm was proven beyond a reasonable doubt. The bodily harm alleged had been a broken leg to the complainant, Mr. Sgambelluris. The most that the trial judge found was that there was a chest bumping by Mr. Simone to Mr. Sgambelluris; however, how the broken leg was sustained had not been established.

[14] It appears that the broken leg is the focal point of the action brought by the Sgmabelluris couple. Issues about psychological problems and family law claims follow the broken leg. If a trial court were to conclude that the source of the broken leg is not established to be Mr Simone, the Plaintiffs in that action will not be successful. If the trial court in the Sgambelluris action determines that the claim is not based on an assault but rather on negligent actions by Mr. Simone that are not part of an assault, it appears to me that the Respondent is not within the exclusionary provisions of the policy because they are not derivative to the claims of assault.

[15] If the negligence is derivative of the assault itself, the exclusion provisions of the policy apply as well.

[16] The authors of the claim for damages for negligence are the Plaintiffs in the action brought by Mr. Sgambelluris and his wife. At this stage, discoveries have not been conducted, I am advised, so that Mr. Simone and in effect this court are limited to not knowing what the positions of the Plaintiffs will be.

[17] There is a possibility that a negligence claim might advance with merit at this stage so that the exclusion provisions of the Respondent’s insurance policy cannot be applied.

[18] Although I might speculate that the fact situation will not move beyond being the result of an assault, I am advised that in the altercation between the two men, Mr. Simone received more of beating than Mr. Sgambelluris. I am sure that such evidence will be presented to the trial court completely so that one will have a greater understanding of what happened. One might speculate that if Mr. Sgambelluris were administering a beating on Mr. Simone, one might conclude that both parties were guilty of assault. One might conclude that Mr. Sgambelluris fell simply by losing his balance as a result of his own actions. I do not have evidence to make any decision about what happened. What I do have is a statement of claim by a third party alleging a claim in damages for negligence that could be non-criminal activity.

[19] If that is the situation, then, there is sufficient foundation for the Applicant to be given declaratory relief for legal representation on such claims.

[20] There is also a claim for punitive and exemplary damages which are excluded from the insurance policy regardless of the background facts.

[21] I am satisfied that Mr. Simone is entitled to declaratory relief for the Respondent to defend the action on his behalf with the exception of a claim for punitive or exemplary relief.

Conclusion

[22] There will be an order for a declaration that the Respondent defends the action.

[23] The declaratory relief does not include defending a claim for punitive or exemplary damages.

Justice B. Glass

Date: May 31, 2013